4 Tips For Negotiating Salary With Employees

Negotiating Salary

It’s easy to be taken by surprise by an employee’s request for a pay increase. How you handle negotiating salary with your employees plays a critical role in employee happiness, retention and the overall success of your organization. However, you are a business and it’s important for you to keep an eye on your bottom line. These are the two tensions at play in negotiating salary.

Fortunately, you both want what is best for the business and its workers. All you have to do is find some common ground. So here are 4 tips for negotiating salary with an employee.

Take Their Request Seriously

The last thing you want to do is not take an employee’s request for money more seriously. Even if you think they are already adequately compensated, you need to show respect for the process. Listen to their concerns. This is one of the key aspects of negotiating salary that many employers overlook. Then, go through the steps normally associated with any salary examination to objectively show whether an increase has merit.

Examine Past Performance

The best way to measure whether an employee deserves an increase is to assess previous performance. Have they had a particularly good year and do their contributions merit an increase? Often, an employee will perform well on a project and feel that they deserve a raise. However, it’s important to examine more than just the last few months and make sure that your investment in a raise will pay off for your business as well.

View In The Context Of The Organization

Don’t just look at the scale of the increase, but also how much your employee is being paid in the context of the entire organization. Are they making more or less than their equivalents and how much value does their position bring to your business? If it’s a position critical to the functioning of your company, you’ll need to take that into account. The last thing you want the person leaving their job for another company and leave you in a lurch.

Offer Alternatives To Money

Sometimes, an employee might deserve a raise but you simply cannot afford to pay them more at that time. So you can work to discuss other options that might have value to an employee. You can offer opportunities for training and development or more flexible hours and the ability to work from home.

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